US, China Agree to Tariff Truce at G20 Summit

Dec 05, 2018

During last week’s G20 summit in Buenos Aires, Argentina, President Donald Trump and Chinese President Xi Jinping agreed to freeze tariffs temporarily at current levels without additional escalation for 90 days, beginning Dec. 1. President Trump agreed to pause U.S. plans to escalate tariffs on Jan. 1 and to allow a 90-day period for negotiations on an array of outstanding issues related to Chinese technology transfer policies and intellectual property protections, non-tariff barriers, World Trade Organization reform, artificial intelligence and other issues.

The White House said Monday that China also agreed to begin purchasing U.S. agricultural products immediately. So far, the Chinese government has not specified the amount or type of agricultural products, but IDFA believes they most likely will be U.S. soybeans.

Larry Kudlow, White House national economic council director, participated in the meeting and said that he expects China to drop its retaliatory tariffs on U.S. agricultural products. However, IDFA does not expect that dairy companies will see any near-term relief on the retaliatory tariffs on U.S. dairy exports to China.

Dairy Tariffs

China is the third-largest export market for U.S. dairy products and the leading market abroad for U.S. whey.

Due to China’s intellectual property policies and practices, the United States imposed tariffs on billions of dollars’ worth of Chinese goods earlier this year. China retaliated against these U.S. tariffs with duties on dairy products.

As of September, China has placed tariffs on essentially all U.S. dairy products. From July to September 2018, U.S. whey exports declined 36 percent year-over-year and U.S. cheese exports have declined 51 percent year-over year.

“We are monitoring this situation very closely and we will continue to advocate that China lift its tariffs on U.S. dairy products as soon as possible,” said Beth Hughes, IDFA senior director of international affairs.

Most recently, Michael Dykes, D.V.M., IDFA president and CEO, participated in a briefing on Capitol Hill, stressing that China’s retaliatory tariffs are costing the U.S. dairy industry millions in sales, market share and jobs.

Next Steps

If the two sides cannot reach an agreement over the next three months, the Office of the U.S. Trade Representative (USTR) would then proceed with previous plans to increase tariffs from 10 to 25 percent on $200 billion worth of Chinese imports.